Shares of streaming platform Roku (ROKU) are up 7% on news that JMP Securities initiated coverage of the stock with a Buy-equivalent outperform rating.
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Matthew Condon, a four-star rated analyst who boasts a 100% success rate, says in his analysis that Roku has further room to grow in the streaming space. Condon at JMP Securities set a price target on ROKU stock of $95, suggesting 17% potential upside from where the shares currently trade. There has been some speculation online and in the media that Roku might be a takeover target.
Condon likes that Roku makes internet-connected televisions and devices for streaming content, operates its flagship Roku Channel that provides free, ad-supported TV shows and movies, and runs an online advertising business. The analyst notes that Roku is now the leading TV operating system in the U.S., while the Roku Channel is the number-three streaming app in America, according to Nielsen data.
Growth Ahead
In its assessment, JMP Securities says that Roku reaches more than 90 million households worldwide each month and the Roku Channel is now in nearly half of all U.S. households that have a broadband internet connection. Condon says that Roku’s low-cost hardware and user-friendly interface are key differentiators for the company.
He also notes that Roku is enhancing its relationships and integration with third-party ad-buying platforms such as The Trade Desk (TTD). Going forward, Condon sees Roku continuing to benefit as more advertising dollars migrate to streaming platforms alongside sports content and live entertainment. “We expect viewership and ad dollars to increasingly transition to streaming,” wrote Condon.
ROKU stock has declined nearly 10% in the past 12 months.
Is ROKU Stock a Buy?
Roku stock has a consensus Moderate Buy rating among 21 Wall Street analysts. That rating is based on nine Buy, 10 Hold, and two Sell recommendations issued in the last three months. The average ROKU price target of $80.39 implies 0.32% upside from current levels.
